Unfiled

Memo to Tom Dick, Vacutherm

Our discussions of 28th October reveal the sad state of affairs on the embargoed contract. The following facts should be recorded:

1) The end user is attempting to put the equipment on line without additional purchases. He does not have agreement from his own staff with respect to the technical parameters and therefore cannot fix the parameters required to finish the project. There is no project leader to drive the task.

2) The Buyer is sticking to the letter of the rule book which, under the best of conditions, limits the end user's options. In this situation the end user must release funds and demand results. It now appears that this project does not have a high priority with the superiors of the end user and therefore may grind to a halt.

3) Consarc must observe the laws and instructions from its Boards and therefore must quit the project. A decision has been taken to quote and supply any parts requested by the Buyers which do not require a License. The original contract has not been closed. Insurance cannot be obtained from ECGD on any other shipments to the USSR. Consarc is at risk if it makes parts shipments prior to closing the old contract.

4) BEPA cannot continue its present contract. This contract must be concluded between the parties with payment of invoices. If the buyer fails to pay this it will show that they can refuse to pay for additional shipments.

5) The project has many technical flaws including improper parameters, poor design and faulty execution of some of the parts. In addition shortages, which were embargoed, short shipped and Guarantee replacements have not been replaced. Consarc's making of proper lists which would allow the job to proceed is not allowed by the Letter and Intent of the Consarc's Board's instructions.

6) The fact that the British Government does not prevent Consarc from sending engineers is well known to the buyers. If the project does not proceed the buyer knows that Consarc, not the Government, is delaying the project. As you are aware from the buyer's comments, Consarc will be "black listed" with this Buying House at a minimum. At present it appears that Consarc must close the old contract and ship the Calcarb contract before other orders will be issued.

7) It might be helpful if some third party entered into a contract with this buyer to supervise and advise the project within limits allowed by the Law and Regulations. This third party would not be allowed to use Consarc, its employees or its agents nor could it be an agent of Consarc in any way.

8) Any third party which sells components for this project, which would have normally been sold by Consarc, may be treated as a competitor of Consarc's and treated accordingly.

Suggest if you desire, that we obtain visas for 17th November 1985 for meetings in Moscow to bring the BEPA matter to a conclusion with at least yourself being paid under the terms of the contract, including transportation and hotel. If Machinoimport fails to pay our invoices of 5th October 1985 by that time we can conclude that they have defaulted the contract by non payment. There is now a hint that they will not support my visa for any visit.

The road to follow is very tricky. I can see no way that I can add anything to the situation, other than closing the contracts and selling spares, without major risk, including Rowan, American Law and the USSR Criminal Law if something they could claim I had designed, God forbid, injures someone or destroys property. Suggest you study the situation with great care before your next step is taken.